It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Saturday, May 13, 2023
Chile’s mining royalty bill heads for final vote
Cecilia Jamasmie | May 11, 2023 | Andina Transfer station sits at 3,500 metres above sea level. (Image courtesy of Codelco | Flickr.)
Chile’s senate has approved an amended mining royalty bill, in the works for almost two years, passing it back to the lower chamber for a final vote expected to come as early as next week.
The proposed law, first introduced in 2018, originally called for a flat-rate ad valorem tax of 3% on large-scale copper miners that extract more than 50,000 tonnes per year.
Following the collapse in support for the right-wing President Sebastian Piñera and the social unrest in late 2019, the bill was modified.
The amended proposal imposes a flat-rate ad valorem tax of 1% on copper companies that produce more than 50,000 tonnes per year.
Additional royalties would be assessed at rates fluctuating from 8% to 26% based on miners’ operating margins, rather than being adjusted according to the price of copper as was originally proposed.
Depreciation, as well as supply and work costs, would be taken into consideration in calculating operating margins.
“This has been a tremendously important step” for raising funds on a regional level, Minister of Finance Mario Marcel told reporters after the vote late Wednesday. Pending approval in the lower house, it will also provide the industry with “a clear panorama to make decisions.”
Miners in Chile, the world’s top copper producer, currently have a tax burden of 41% to 44%. The tax ceiling for units of giant mining companies, including BHP (ASX: BHP), Anglo American (LON: AAL) and Teck Resources (TSX: TECK.A | TECK.B) (NYSE: TECK), has been the focus of debate for months as President Gabriel Boric’s administration attempts to increase its take of copper earnings, without undermining Chile’s competitiveness.
Earlier this week, the government said it had reached an agreement with senators to cut the top tax rate to 46.5% from 47% for companies that produce over 80,000 tonnes of fine copper a year, and 45.5% for production in the 50,000-80,000 range.
According to official figures, the new mining royalty would inject about $1.5 billion a year into the state’s coffers, from which $450 million will be distributed to regional governments for social spending.
Minister of Mining Marcela Hernando told MINING.COM on Thursday she was satisfied with what the bill looks like.
“As a ‘regionalist’ at heart, I am very happy to see the bill will direct an important injection of resources not only to those areas where mining happens, but also to the poorest communities,” Hernando said.
Chile’s main competitors in the copper sector, such as Peru, have a tax of 41% to 44% over large producers’ operating profit.
Controversial Barge for Migrant Housing Arrives in UK
An aging accommodations barge has arrived in Falmouth, UK for inspection, and after any needed repairs, it will soon begin housing Channel-crossing migrants as part of a government plan to make emergency housing less welcoming.
The 50-year-old floatel Bibby Stockholm was built to house project workers at undeveloped ports, but in recent years it has been repurposed for temporary housing for the homeless and for asylum-seekers in the EU. Under charter to the UK government, it will be moored alongside in Portland Port, Dorset, where it will house up to 500 single male migrants at a time.
The local government in Dorset is concerned that the presence of this many migrants in a concentrated facility will require extra policing, and local officials have asked the Home Secretary for funding to cover the additional law enforcement costs. Some officials are altogether opposed to the idea of locating the barge in their harbor.
"We still have serious reservations about the appropriateness of Portland Port in this scenario and we remain opposed to the proposals," Spencer Flower, leader of Dorset Council, told Express. "We still have unanswered questions which we are waiting for the Home Office and the barge operator to respond to."
The barge has enough space to house about one percent of the 50,000-plus asylum seekers currently staying in hotels across the UK. The $7.5 million-per-day cost of these hotel rooms has prompted the government to look for cheaper (and less attractive) alternatives.
"Being housed in a hotel with all the amenities that that gives is not appropriate for people coming here illegally. . . . We must end, if you like, this perverse incentive through the hotels and in a broader sense the hospitality that this country gives [to migrants]," UK Justice Minister Dominic Raab said in March.
The previous administration of former Prime Minister Boris Johnson considered cruise, ferry or barge accommodations for migrants in 2022, but set the plan aside when officials warned that it could be costlier than hotels. In addition to the charter costs, port fees and security could impose additional expenses, according to Bloomberg. (Dorset is said to be in line to receive about $4,000 per migrant housed aboard Bibby Stockholm.)
Despite these concerns, more barges are coming to other UK ports soon, the Home Office told media on Monday. In the long term, the government hopes to pass legislation allowing expedited removal of asylum seekers to willing third countries; Rwanda has agreed to be an early participant in the program.
ALL CAPITALI$M IS STATE CAPITALI$M
South Korea Expands Support for Shipbuilders as Challenges Grow
Ministers announced additional support during a visit to the HD Hyundai shipyard in Ulsan (file photo)
The South Korean government announced a series of new initiatives planned to further support the domestic shipbuilding industry. Government officials cite the strong orderbook built over the past two years as the industry rebounded and leadership in what they term “high-value” ships while also recognizing the growing competition and need to develop new technologies.
Minister of Trade, Industry, and Energy, Lee Chang-yang outlined the plans to support the industry with further investments during a tour of the HD Hyundai Heavy Industries shipyard in Ulsan on Wednesday, May 10. Supported by the Ministry of Justice and the Financial Services Commission, he said the government would be expanding its investments to support the development of new technologies while also increasing the foreign worker programs and providing new financial support programs all designed to expand South Korea’s position in the industry.
Previously the government had launched programs to support research and development of advanced technologies including ammonia, hydrogen, and electric propulsion. They have also outlined programs to support training and recruitment to meet the long-term employment needs and address the current shortage of skilled workers.
The announcement of the new programs comes as the shipbuilding industry is under pressure as global orders have slowed since late 2022. Clarkson Research in its latest monthly update highlighted that April saw the lowest monthly level in three years, with just 80 ships (1.85 million compensated gross tons) ordered, a 62 percent decline over a year earlier and a 44 percent decline versus the previous month. South Korea’s shipyards received orders for only 13 ships, 20 percent of the market, while China grew its market share to 70 percent.
Minister Lee however highlighted that South Korean shipbuilders currently have orders for nearly 40 million tons or 35 percent of the order backlog. He pointed to the $9.4 billion in orders booked in the first three months of the year and a 12-year high of 38.68 million CGT in March, enough to “generate income for the next three years.” Korea won 70 percent of the high-value and green shipping orders in March, including 17 of the 19 LNG carriers ordered worldwide. The Minister expects the industry will generate $21.5 billion in exports this year alone.
"The world has a close eye on our shipbuilders' technology and manufacturing capability, and the business environment is changing favorable to us, with ship prices rising and more demand for environment-friendly vessels," Lee said during his presentation. "The government will spare no effort to support the industry's rebound and for market leadership in the future.”
To address the labor shortage, the government said that approximately 5,500 foreign workers had entered South Korea so far this year. They have already reached a third of the industry’s goal of 14,000 foreign workers this year with the government promising more efforts to simplify visa and labor regulations.
Other programs include investments of approximately $135 million for R&D of new technologies. The government looks to expand efforts in autonomous shipping and eco-friendly designs to continue the leadership in high-value shipbuilding. The Financial Services Commission is also expanding finance programs designed to extend more support to medium-sized shipbuilders. More state-run and commercial lenders will be involved to ensure more access to financing for the large and medium-sized shipbuilders as well as increase the guarantee rate for shipbuilders to protect from contacts terminated due to a builder’s default.
The ministers said the industry is coming back from years of an industry-wide recession but it will be critical to maintain South Korea’s competitive price, quality, and technological advantages.
Korea Commissions LNG Bunker Vessel with Domestic Containment System
Blue Whale employs a domestically designed containment system and tanks (Ministry photo)
South Korea christened its new domestically designed and built liquified natural gas bunker vessel this week. The ship marks a milestone as it incorporates the country’s newly developed second-generation LNG containment system. The goal was to develop a domestic technology that will be competitive on the international market and provide a marketing advantage for Korean shipbuilders.
Christened the Blue Whale, the vessel has the capacity to provide 7,500 cubic meters of LNG fuel directly to vessels, which represents an advancement as it replaces up to 250 trucks required to deliver the same amount of LNG. The vessel was built in a project led by Korea LNG Bunkering which is a subsidiary of KOGAS, which in turn was selected by the Ministry of Trade, Industry and Energy in 2020. The government provided a subsidy of $11.7 million to support the development and construction of the bunker vessel with the new tank design and technology
The completion of the ship marks a 20-year effort by Korea to develop a domestic LNG containment system. Officials noted that while their shipyards continue to be a leader in the construction of LNG carriers, they and their competitors continue to license containment technology at a cost of up to $7.5 million per vessel. The goal of the project was to end Korean dependence on technologies from French giant GTT, the world’s leading company in the design and construction of LNG tanks and containment systems.
“We will be able to secure advanced, high-value homegrown cargo technology, as the Blue Whale will verify the KC-2 system for commercialization,” said Korea’s Ministry of Trade, Industry and Energy.
The new system is the second attempt by the South Koreans in a project that began in 2004 when Korea Gas Corporation in partnership with Daewoo Shipbuilding and Marine Engineering, Hyundai Heavy Industries, and Samsung Heavy Industries, began to jointly develop LNG tanks with support from the government.
The first product, the KC-1 LNG tank technology, took 10 years to develop and was adapted for use on four domestic ships, but structural defects caused gas leakages, and installation of the tank on carriers was halted. Based on lessons learned with the KC-1 membrane technology, the Korean government launched a second project in 2017 to upgrade the system to come up with the advanced KC-2 tank design.
The Blue Whale will be operated by Hyundai LNG Shipping after winning a bidding contest in January for the right to run the vessel. It will be employed for bunkering and will undergo a rigorous series of tests and demonstrations. Korea expects to commercialize the KC-2 technology to provide a new competitive advantage in the sector.
Korean shipyards continue to be the leader in shipbuilding for gas carriers although China has begun to compete for new orders. The Blue Whale was built by Hyundai Heavy Industries at the Ulsan Shipyard at a cost of $41.7 million. Hyundai Heavy Industries highlights that it has built a total of 100 LNG ships to date and that it currently has orders for 58 of the 155 LNG carriers to be built worldwide.
HMM Enters Bidding to Acquire Hyundai LNG Shipping
Hyundai LNG introduced Korea's first LNG carrier 30 years ago and became independent during Hyundai's liquidity crisis (Hyundai LNG Shipping)
HMM has reportedly decided to enter the bidding to acquire its former LNG shipping operation that was spun off a decade ago during the company’s liquidity crisis. The Korea Herald is reporting on Friday that HMM notified IMM Holdings, owners of the gas carrier, of its intent to enter the bidding and to begin a due diligence process.
South Korea’s largest LNG carrier, Hyundai LNG Shipping was put up for sale by the investment company that has owned it since 2014. IMM reported its plans to sell the company it had acquired for a reported $375 million a decade ago opening the bidding process in March. Since then, an initial list of 20 potential buyers has reportedly been narrowed to four, with all of them being foreign companies. Media report said the potential buyers are located in the United States, the UK, Denmark, and Greece, with bidding expected to be completed later this month.
HMM reportedly had sought to buy the gas carrier at the end of 2022 but could not agree on a price and gain the support of its two large shareholders. IMM then placed the company up for sale, but recently there have been objections because of the critical role the company plays in the import of LNG to Korea. The shipping industry recently objected to the government over the possible foreign sale of Hyundai LNG Shipping. Reports said that the government is also considering the ramifications of a foreign sale and looking to possibly block it on the grounds of national security.
HMM is also currently beginning a process to be privatized by its owners Korea Development Bank and the Korea Ocean Business Corporation, both government institutions that had become the largest shareholders during a financial rescue of the company then known as Hyundai Merchant Marine. The banks recently named a group of advisors to structure the sale process for HMM. It is expected that they might launch bidding later this year for the carrier.
The company which is today primarily a container carrier had previously reported its strategy was to grow its operations including in bulk shipping. In July 2022, HMM detailed a five-year strategy calling for $11.4 billion in investments that would double its container capacity. They also said investments would be made to increase the bulk fleet, which includes 10 VLCC crude oil tankers as well as one Suezmax, two chemical tankers, and one LNG carrier. HMM also has a fleet of dry bulkers for iron ore and coal transport.
Hyundai LNG Shipping reports it launched Korea’s first LNG carrier in 1994. After the IMM acquisition in 2014, they won a transportation contract with KOGAS and more recently began expanding the fleet including with LPG carriers. Earlier this year they took delivery on three VLGCs built by Hyundai Samho Heavy Industries with two more due for delivery later this year. The total fleet will consist of 16 LNG carriers and six LPG carriers. They also recently launched Korea’s first LNG bunker vessel.
The Korea JoongAng Daily is reporting that the bidding process for Hyundai LNG Shipping will now be delayed to permit HMM to enter a proposal. IMM had previously said it had not received a reasonable financial offer from a Korean company but that it is not opposed to selling the company to Korean investors at a fair price.
Fleet of Chinese Gov't Vessels Loiters in Vietnamese Gas Lease Block
On Wednesday, a flotilla of Chinese vessels entered Vietnamese waters and loitered in a Russian-Vietnamese offshore lease block in a direct challenge to Russian interests, according to AIS tracking conducted by the non-profit South China Sea Chronicle Initiative and other monitors.
The Chinese survey ship Xiang Yang Hong 10 was found transiting within the Vietnamese EEZ at a position about 120 nm off Con Dau, according to Radio Free Asia. The ship was accompanied by two China Coast Guard patrol vessels, pennant numbers 4303 and 5305, and no fewer than seven Chinese maritime militia trawlers. This task force is larger than usual, and Vietnam dispatched a fisheries surveillance ship, the Kiem Ngu 414, to monitor their transit.
According to Reuters, the Chinese research vessel transited at a speed appropriate for surveying, an activity which normally requires the approval of the coastal state.
The area of the transit included a lease block held by Russian oil company Zarubezhneft and state oil firm PetroVietnam. Like earlier Chinese pressure on Rosneft's offshore gas activity off Vietnam, some analysts view the transit as a direct challenge to Russian interests.
"[This is a] test of truth on whether Russia, beholden to [China] due to the war in Ukraine, is a mere second-rate power by succumbing to Beijing's pressure and abandon[ing] its foremost partner in Southeast Asia," said Collin Koh, Research Fellow at the S. Rajaratnam School of International Studies.
Two days earlier, a single Chinese maritime militia vessel approached a joint ASEAN-Indian naval exercise in the Vietnamese EEZ, according to RFA. The vessel passed by the other participants without further incident.
China claims much of the Vietnamese EEZ as its own inherent territory under its "nine-dash line" policy. Chinese research vessels and coast guard cutters are frequent visitors to Vietnamese waters, particularly near oil and gas projects. Russian oil major Rosneft abandoned the Vietnamese market after encountering similar pushback.
"China’s tactics in the SCS . . . feature the use of research vessels and their escort fleets to harass gas and oil development activities of other claimants, forcing them to reconsider or abandon their projects. China often deploys several survey vessels, as well as an escort fleet of law enforcement vessels and maritime militia, to planned oil and gas blocks of claimant states in order to deny other claimants access to these waters," explained researcher Viet Hung Nguyen Cao in a 2020 analysis.
ABS, KSOE Plan New Study on Floating H2 Production off Korea
ABS and KSOE have announced a new study on the possibility of installing a near-shore floating platform for wind-powered hydrogen production off the coast of South Korea. The project builds on the expertise that the two firms developed through the design and approval of a floating hydrogen production platform last year.
Working together with specialty gas company Linde and the Korea Institute of Energy (Kentech), ABS and KSOE (an HD Hyundai subsidiary) will prepare a feasilibility study on developing a green hydrogen production and liquification facility at a near-shore floating platform utilizing offshore windpower. The study will be part of a broader report compiled by Korea's Jeolla Province on floating hydrogen production.
KSOE's design for an offshore green hydrogen production platform received an ABS AIP in 2022. It offers several options for the end-user, including hydrogen liquefaction, ammonia and methanol conversion for export.
"HD Hyundai Group is pleased to contribute to the development of the green hydrogen production platform through this MOU, utilizing our many years of experience with offshore platform technologies and liquefied gas carriers," said Sungjoon Kim, HD Hyundai Group Chief Technology Officer.
South Korea's government is enthusiastic about the prospect of developing green hydrogen production at scale as a way to increase domestic energy self-sufficiency, and it is investing billions in a future hydrogen-based economy. So are Korea's chaebols, which together have committed to investing $38 billion in hydrogen-related development.
In November 2022, Prime Minister Han Duck-soo announced a new national plan for a low-carbon hydrogen supply chain and hydrogen energy industrial base in Korea. The plan calls for 30,000 hydrogen-fueled commercial vehicles on the road by 2030 and a seven percent-hydrogen energy mix by 2036.
“The South Korean government is very engaged with the private sector, openly accepting feedback on policies and pro-market measures [for hydrogen],” said Joohyun Baik, Senior Manager in Commodities and Global Markets at Macquarie, in an analysis last year. “Other governments might learn from this approach.”
China Commissioning First Deep-Sea Floating Offshore Wind Turbine
Floating 7.25 MW wind turbine will be deployed in deep, ocean sea conditions (CNOOC)
China reports it has completed the installation of its first floating, deep-sea, wind turbine which will be used to power an offshore oil field. Developed and owned by the China National Offshore Oil Corporation (CNOOC), the wind turbine is being reported as a breakthrough due to its ability to handle harsh sea conditions in deep and open seas. CNOOC reports it will be a model for opening up the far offshore wind sector.
The turbine, known as CNOOC Guanlan, was completed in March. It was built in the Zhuhai region and on March 26 departed for placement at the Wenchang Oilfield, which consists of oil and gas platforms.
The wind turbine is reported to weigh over 11,000 tons with its foundation and was positioned nearly 85 miles offshore. It is floating in a position with a water depth of more than 325 feet. The overall height of the structure stands more than 650 feet. The Chinese engineer placed the turbine atop a triangular floating foundation with three side columns and one center post to hold the wind turbine. The ballast system weighs 4,000 tons.
Last week, CNOOC reported that the placement of the dynamic submarine cable measuring over three miles in length had been completed. They report the cable was designed to withstand conditions up to nearly a depth of 400 feet. It is composed of three 35 kV cables and three 12-core fiber optic cables. Dynamic ship positioning technology and monitoring by underwater robots were used to improve the installation accuracy.
With the 7.25 MW turbine now in position, and the subsea cable installed, CNOOC reports the final commission will proceed. Once the turbine is generating power. They expect it will have an annual generation capacity of 22 million kilowatt hours.
Long Beach Releases Concept Study for Largest Offshore Wind Port
Port Wind would be the largest facility specifically designed to accommodate the assembly of offshore wind turbines (Port of Long Beach)
The Port of Long Beach released its First Conceptual Report for its vision to develop a wind port that would serve California’s emerging offshore wind energy industry. First revealed in the January 2023 State of the Port presentation, the concept is to create a 400-acre terminal known as Port Wind within the port that could be used for the manufacture, assembly, staging, and possibly the maintenance of offshore wind turbines.
The Port of Long Beach reports it is investing $1 million to develop a conceptual design and constructability assessment for the proposed Port Wind as it seeks to capitalize on the emerging opportunities in the new industry. The Bureau of Ocean Energy Management conducted the first ever California offshore wind lease auction in December 2022 as it looks to open the region to development, but cautioned that extensive infrastructure also needs to be developed to support the industry. BOEM performed a study to assess California ports and it indicated that there are limited existing ports that could host staging and integration operations.
The offshore wind industry in California will be confronted with challenging conditions. Unlike the U.S. East Coast, the Pacific Outer Continental Shelf is characterized by rapidly increasing water depths that exceed the limits of traditional fixed-bottom offshore wind turbines. It is anticipated that most of the development of offshore wind will use the more suitable floating wind technology, which currently calls for the assembly of the wind turbines on their foundations in a sheltered port and towing them to their location. BOEM in its report highlights the air height requirements, possibly as much as 1,100 feet, saying most existing ports do not have the needed clearances.
“Imagine fully assembled wind turbines capable of generating 20 megawatts of energy towed by sea from the Port of Long Beach to offshore wind farms in Central and Northern California,” said Port of Long Beach Executive Director Mario Cordero. “As society transitions to clean energy, our harbor is ideally located for such an enterprise – with calm seas behind a federal breakwater, one of the deepest and widest channels in the U.S., direct access to the open ocean, and no air height restrictions. No other location has the space to achieve the economies of scale needed to drive down the cost of energy for these huge turbines.”
In its concept study report, the port highlights the emerging opportunities noting that the Biden administration announced a goal for 15 GW of floating offshore wind by 2035. The California Energy Commission established its preliminary target of 2 to 5 GW by 2030 and 25 GW by 2045, while the governor has called for at least 20 GW by 2045 and directed state agencies to develop a strategic plan for offshore wind development.
Port Wind at Long Beach would be located in the Outer Harbor, just south of the Navy Mole and near the western border with the Port of Los Angeles on newly created land. Critically, this places it outside the Long Beach International Gateway Bridge meaning there would be no height limitations. Among the port improvements necessary to support the plan would be a deepening and widening of the main channel and the construction of approach channel and turning basin in addition to the landfill adjacent to Pier 400 in the Port of Los Angeles.
According to the concept study, Port Wind would be the largest facility specifically designed to accommodate the assembly of offshore wind turbines. The terminal would have the capability for heavy-lift crane operations to stage, store, and construct floating wind turbines. The concept calls for a flexible design so that it could host operations ranging from staging and integration to foundation fabrication, component manufacturing, maintenance, and support.
The port’s newly released concept study provides information to continue planning and discussion with state and federal officials, developers, and funders for the $4.7 billion project. Construction could potentially start in January 2027, with the first 100 acres operational in early 2031, the second 100 acres operational in late 2031, and the additional 200 acres coming online in 2035.
German Government Permits COSCO’s Investment in Hamburg Terminal
German government will permit COSCO to acquire a share in a Hamburg container terminal (COSCO)
After 18 months and a strong political debate over the level of Chinese influence in Germany and the West, the German federal government on Wednesday cleared the way for COSCO Shipping Ports Limited to invest in one of the three large container terminals in Hamburg operated by Hamburger Hafen und Logistik (HHLA). The company responded thanking the government and saying that the investment would permit the terminal to be expanded into a preferred handling location for the strong trade with China.
“The federal government confirmed to the parties to the purchase today in a letter that the revised purchase contracts are in line with the conditions of the partial prohibition,” they said in a statement. Calling the terminal critical infrastructure, the federal government said the cabinet decision for a partial ban limiting the investment to under 25 percent would be upheld.
HHLA had been pushing for a decision from the federal government after first announcing the investment agreement in September 2021. At the time, they said COSCO intended to purchase a 35 percent stake in the Tollerort terminal (CTT) to consolidate its operations in Hamburg.
Last month, HHLA said, “We believe we have answered all the questions.” They called on the federal government to finalize the terms initially set by the cabinet in October that reduced the investment percentage. Reports in the German media suggested that there however had been an ongoing debate to possibly lower the “partial ban” further limiting the percentage COSCO would be permitted to acquire.
The Foreign Ministry was believed to be leading the opposition to the investment. They sought to limit China’s influence on the German port and the broader European transport and trade infrastructure. Chancellor Olaf Scholz supported the deal and pushed through the compromise to win support from members of his collation government.
“All issues within the scope of the investment screening process were clarified jointly in intensive, constructive talks,” HHLA said in its statement today. HHLA and COSCO anticipate that they will finalize the transaction soon with the Chinese company expected to take a 24.99 percent stake in CTT.
HHLA emphasized that China is currently Germany and the Port of Hamburg’s largest trading partner. They said around 30 percent of the goods handled in the Port of Hamburg come from or go to China.
Located off the Elbe, HHLA Container Terminal Tollerort occupies the smallest area of the container terminals in Hamburg but is considered to be a highly efficient operation. It has four berths able to receive the largest capacity containerships in the world. It can handle vessels 1,300 feet in length and with a beam of up to 184 feet. It accommodates ships with a draft up to nearly 50 feet.
HHLA has said the investment would ensure Hamburg’s position in global trade and provide for additional jobs. They cited the growing competition among ports and the need to strengthen the relationship with COSCO to retain and grow its volume in the port.
Russia Starts Building Ships for North-South Trade Route to Iran
Construction has begun on four versatile container/bulk carriers that will sail on rivers and the Caspian Sea (USC)
The first block for a new class of Russian domestic containership that is also capable of carrying dry bulk cargo was laid down at the Lotos Shipyard, part of the state-owned United Shipbuilding Corporation. In addition to the unique design, the shipbuilding corporation is reporting the ships will be a key contributor to Russia’s plans for the North-South International Transport Corridor and proof that Russian shipbuilding is proceeding despite the sanctions.
Construction is beginning on the first of four vessels that will be the lead to the class. The vessels measure approximately 463 feet in length and have a 55-foot beam and depth of up to approximately 20 feet giving them the maximum dimensions to transit the Volga-Don Canal. The 60-mile long waterway opened in the 1950s makes it possible to sail from Saint Petersburg to the Caspian Sea.
The design for the vessels was developed by the design bureau of USC, Vympel Design Bureau in Nizhny Novgorod, and they are saying it is unique because in addition to containers, it can carry any type of dry cargo, including grain, timber, and lumber, general cargo, in two holds. The vessels will also have a large capacity for oversized cargo. The capacity will vary between 5,000 tons for river transport, where it is limited to a draft of approximately 12 feet, and 9,200 tons for sea transport. Propulsion for the vessels will consist of two medium-speed diesel engines each with 1200 kW and two rudder propellers with a speed of up to 10 knots. There will also be two auxiliary diesel generators of 400 kW which will be enough to power 60 refrigerated containers.
According to the Ministry of Industry, Trade and Energy of the Astrakhan Region the plan is to build a total of 21 of the vessels for the North-South trade. Officials have said that at least 45 ships of the Volga-Don Max class are needed longer term for the new corridor. Each vessel is expected to cost about $22 million to build.
Officials of USC highlighted the start of the project with the keel laying on May 4 as evidence of the strength of Russian shipbuilding. The Lotos Shipyard where the vessels are being built was one of 28 subsidiaries as well as United Shipbuilding Corporation designated by the U.S. Department of State in April 2022 as being part of the Russian defense establishment. The sanctions implemented in response to the war in Ukraine prevent U.S. companies from working with, financing, or providing supplies to the sanctioned shipyards.
The new vessels are part of an agreement highlighted by Russia to build trade on the Caspian Sea. The corridor stretches some 4,500 miles and links to Iran’s railway and road system. The endpoint is the port of Bandar Abbas and from there, cargo will also be able to continue by sea to India. Branches along the route also make it possible to send cargo to Azerbaijan, Kazakhstan, and Turkmenistan.
Russian officials reported that they expect with the contribution of these new vessels trade will grow dramatically along this route. They said that 17 million tonnes move along the route currently and it will grow to 32 million tonnes by 2030.
The first of the new vessels is due to enter service in 2024. Two ships of the class will be delivered during the first year and two additional ships in 2025.
Russian Court Seizes Control of Four Tugs Owned by Maersk’s Svitzer
Svitzer has four tugs operating under contract to the Sakhalin-2 oil and gas project (Robert Allan photo)
A Russian arbitration court in late April seized control of four tugs owned by Maersk’s Svitzer towage company and operating under a long-term contract to provide services at the Sakhalin-II oil and gas project in eastern Russia. Maersk had been seeking to end the services since the company announced plans two years ago to withdraw all operations from Russia in protest over the invasion of Ukraine.
Svitzer built four Robert Allan designed heavy-duty ice-class tugs in 2007 which were operating under charter to a Russian subsidiary Svitzer Sakhalin which in turn had an agreement with the operators of the oil and gas project to provide marine services. The contract was extended in early 2020 going into effect in November 2020 and running for an additional 10 years. At the time, Svitzer said it supported the mooring of more than 1,800 gas carriers with the four tugs and two mooring boats. Svitzer said it had 58 Russian crewmembers and nine onshore staff.
The Russian government took control of the Sakhalin-II project in August 2022 from the operating company that had been formed by Gazprom in partnership with minority investors Shell, Mitsui, and Mitsubishi. Svitzer’s service contract was transferred to the new Russian operator of the oil and gas project.
According to Russian media reports, Svitzer announced plans to transfer the four tugs out of Russia and re-registered them away from the Russian flag with Svitzer Sakhalin attempting to invoke a force majeure on April 17 to suspend the service contract. The Russian operator of the oil and gas project took Svitzer to court arguing that the loss of the four tugs could jeopardize production activities at the facilities.
Russian media outlet Kommersant reports on April 24 the court temporarily arrested the four tugs and gave control of them to a third-party company. They granted the right to continue to operate the tugs in Prigorodnoye. The stories indicate that Svitzer has the right to file an appeal till May 18 seeking to regain control of the tugs and end the service contract.
In a brief statement, Maersk said “We believe the situation regarding the tugs is untenable and efforts to resolve the matter are ongoing.” Maersk reports that all of Svitzer’s employees in Russia have resigned.
The tugs were one of Maersk’s final assets in Russia. In 2020, the company took a more than $700 million write-down on its Russian assets. It sold its interest in a terminal operator and its cold storage warehouse in Saint Petersburg and inland terminal in Novorossiysk. They had indicated that they were also looking to sell the four tugboats.
The vessels, the Svitzer Sakhalin and Svitzer Aniva, were built by ASL Shipyard of Singapore, while the Svitzer Busse and Svitzer Korsakov were built by Admiralty Shipyard in St. Petersburg, Russia. Each is 590 dwt with a length of 113 feet overall.
When the tugs were built, Allan reported they were a unique design. Diesel powered they demonstrated during trials a bollard pull of 73 tonnes and a free running speed in excess of 13.5 knots. “The unique hull form incorporates an aggressive icebreaking ‘spoon’ bow, with shallow buttock angles in the ice contact zone, optimized for icebreaking performance,” Allan said. The tender called for tugs having the capability to break 85 cm of level ice at a minimum of 3 knots, perform harbor ice management, and when operating in pairs break a channel wide enough for the tankers calling at the terminal.
US Will Bolster Posture in Persian Gulf as Iran Seizes Third Tanker
US Coast Guard and a Navy drone recently transiting the Strait of Hormuz (US Navy photo)
The White House on Friday said the U.S. Navy would “begin to bolster its defensive posture” in the Arabian Gulf region in response to actions by Iran continuing to harass commercial vessels in the region. At the same time, Iranian state media was widely reporting that they have taken legal control of yet another tanker in the region this time to settle a commercial dispute. So far, no Western media has confirmed the latest reported actions by the Islamic Revolution Guards Corps (IRGC).
During a press briefing, John Kirby, Assistant to the Secretary of Defense for Public Affairs, highlighted the new efforts. He pointed to the 15 internationally flagged commercial vessels that the U.S. says have been harassed, attacked to interfered with in the region by Iranian forces. There was no mention of the direct interaction between Iran and the ships of the U.S. Navy and U.S. Coast Guard, which have reported a series of close approaches and risky maneuvers by the Iranians. “Today, the Department of Defense will be making a series of moves to bolster our defensive posture in the Arabian Gulf,” Kirby told reporters.
U.S. 5th Fleet issued a brief statement saying that CentCom “is working with regional allies and partners to increase the rotation of ships and aircraft patrolling in and around the Strait of Hormuz following Iran’s recent unlawful merchant vessel seizures.”
This announcement comes after members of the U.S. House of Representatives and the U.S. Senate at the end of April introduced a bill, the Maritime Architecture and Response to International Terrorism in the Middle East Act (MARITIME) that calls on the Department of Defense to develop a strategy with Middle East partners and allies to counter maritime threats from Iran and others. The legislation highlights the threats from manned and unmanned naval systems, such as the recently reported drone and missile assaults on merchant ships. The legislators are calling for the development of a strategy and to study the possibility of facilitating an increased maritime awareness and interdiction capabilities to expand on the existing operations in the region.
Iranian state media today is reporting that they took control of a Panama-flagged product tanker Purity (9,250 dwt) while it was sailing in the Persian Gulf. The 15-year old tanker was reportedly directed into the Asaluyeh anchorage in Southern Iran and its AIS signal confirms it has been in the port since May 9.
“The Purity was illegally rented to a foreign individual with forfeited documents about five years ago and its Iranian owners were deprived of their interest,” according to the report in the Iranian media. They are reporting that last month a judicial order was issued for the return of the vessel and that the IRGC acted along with the Ministry of Intelligence in carrying out the seizure.
The product tanker according to AIS data has been making frequent trips between India and the Persian Gulf. It appears to have been in the UAE since the end of last month. The Iranian report says the vessel will be unloaded at the Asaluyeh Port.
The Equasis database shows that the Purity has been owned since 2012 by Sun Ocean Shipping based in Hong Kong. Until late last year, it was also being managed out of Hong Kong before management was transferred to a company in Mumbai, India. The database reflects a long list of owners and managers since the vessel was built in 2008 but says it has been sailing as the Purity since 2019 and for seven years before that as the Sun Ocean.
Two weeks ago, the U.S. reported that Iran had seized another Panama-flagged tanker in the Strait of Hormuz. The crude oil tanker Niovi was taken to the anchorage at Larak/Qeshm Islands. The vessel is linked to Greek shipping interests with Iran saying the vessel was impounded by a court of an unspecified dispute. TankerTrackers.com analyzed the vessel’s history speculating that it was involved in the shipment of Iranian oil and raises the possibility of a dispute between Iran and the managers.
A week before that, however, Iran seized the Advantage Sweet, managed by Advantage Tankers. Analysts linked that action as retaliation for the U.S. efforts to confiscate the crude oil cargo aboard another Marshall Islands-registered tanker the Suez Rajan, managed by Empire Navigation. The U.S. has been pursuing a court case since February 2023 attempting to seize the cargo aboard the vessel which had been anchored in Asia but was last spotted sailing off the coast of Africa. It has been speculated that the vessel is bringing the oil which is believed to be Iranian crude to the U.S. to be offloaded.
